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Author Question: A reduction in the required reserve ratio has the instant effect of: a. Increasing the monetary ... (Read 37 times)

robinn137

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on: Jun 30, 2018
A reduction in the required reserve ratio has the instant effect of:
 a. Increasing the monetary base.
  b. Increasing total bank reserves
  c. Increasing excess reserves.
  d. Increasing bank shareholders' equity.
  e. Decreasing bank shareholders' equity.

Question 2

Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
 a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive).
  b. The GDP Price Index and reserve-related (central bank) transactions remain the same.
  c. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same.
  d. The GDP Price Index rises, and reserve-related (central bank) transactions become more positive (or less negative).
  e. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.


princessflame2016

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Reply #1 on: Jun 30, 2018
Answer to Question 1

.C

Answer to Question 2

.E


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